Wednesday, August 4, 2010

In South Africa people and their vehicles get hijacked by criminals all the time. We even have road signs scattered all over the country warning us to be alert. It now appears that vehicles are not the only objects that can be hijacked by these criminals. Thank you Pam for sending me this story!

Here’s the full story from the Johannesburg Sunday Times:

“Politically well-connected ‘entrepreneurs’, including a senior ANC official, have ‘hijacked’ a company that landed a R220 million deal to build the Gautrain electrical system, by exploiting cracks in the Companies and Intellectual Property Registration Office (Cipro).

“This comes as a red-faced Cipro introduced new measures last week to prevent people registering as directors with fake identity numbers and no documents – as Sunday Times did two weeks ago. Since then, many people have come forward, claiming loopholes at Cipro allowed fraud to be perpetrated against them, citing instances of tender fraud and empowerment fronting.

“In one case, the 28-year-old Roodepoort engineering company Tension Overhead, which landed the lucrative Gautrain contract, said Cipro loopholes allowed it to be ‘hijacked’.

“Advocate Matane Mphahlele simply appointed himself director and managing director of Tension Overhead at Cipro and ‘suspended’ the existing bosses. Then he went to Absa and tried to take over the company’s bank accounts, based on his claim that he owns 60% of the shares – a claim the company is disputing in court proceedings.

“Mphahlele also simply ‘deregistered’ two of the company’s existing directors at Cipro without providing any board resolution or resignation letters, and appointed three of his associates as directors. Both sides have laid criminal charges.

“The ‘hijackers’ are politically well connected. Mphahlele served as a legal director in the Department of Public Enterprises, while his new directors include ANC member and National African Federated Chamber of Commerce (Nafcoc) deputy secretary-general Kentse Makgae, and Limpopo treasury official Thomas Mphahlele. Makgae confirmed she was a new director, but referred questions to Mphahlele.

“Directors whom Mphahlele bumped from the board include BEE heavyweights Buhle Mthethwa, a former Nafcoc president, and Parmanathan Mariemuthu.

“Mariemuthu says minister of trade and industry Rob Davies should take responsibility for this. ‘You can go to bed knowing you own something, and wake up having beendispossessed,’ he says. ‘How can you have Davies telling people to invest in this country when this kind of thing can happen?’

“Tension Overhead director Coenraad Boschoff is astounded that ‘it can be that easy’ to hijack a company. ‘(Mphahlele) no longer has any shares in the company, yet he convinced Cipro to register him as a director. On this basis, I could simply go to Cipro and register myself as a director of Sasol tomorrow,’ he said.

“Alarmingly, Cipro confirmed as much. Cipro’s acting registrar Joey Mathekga admitted that anyone can register as a director of any company today, and Cipro only then launches an investigation. ‘There is no existing legal framework that says you can’t do this,’ he says.

“After Cipro registered Mphahlele as a director, he called a ‘shareholders meeting’ on June 22 where, according to the minutes, he ‘appointed himself the chairman of the board of directors, and also joint managing director’.

“Though Boschoff arrived and objected to the meeting taking place, Mphahlele brushed him off. Instead, Mphahlele’s minutes say it ‘was resolved’ that he and his directorsget access to Tension Overhead’s bank account. Armed with the Cipro registration documents, Mphahlele and Makgae went to Absa’s Horizon branch and demanded access to the account – which was denied.

“But Mphahlele claims it is ‘very unfair’ to portray him as a company ‘hijacker’. ‘I have the right to the 60% … those directors were appointed in a general meeting, where the rule of the majority prevailed,’ he says. ‘I appointed myself chairman of the board because I am representing the majority interest.’

“But Tension Overhead’s bosses say he doesn’t own those shares. Mphahlele’s claim is based on a 2003 deal that gave him 30% of the company. But Boschoff said Mphahlele sold this stake to African Heritage Investments in 2004 and resigned as a director. Boschoff said Mphahlele was ‘double-counting’ by claiming the initial sale agreement gave him the first 30%, and the share certificate he got as part of that deal gave him another 30%. ‘The fact is, there was only ever one deal to sell him 30%, and these shares were ultimately taken over by African Heritage, as that sale contract clearly shows,’ he says.

“Mphahlele also did not part with a cent for that 30%, but he was due to pay R1.5 million for those shares out of dividends that the company would declare. However, it is surprising that Cipro allowed Mphahlele to register new directors, and ‘resign’ others, while the shareholding dispute has yet to be decided in court. The Companies Act does not allow someone to be ‘removed’ as a director without resigning, or after a proper board process.

“Asked how he was able to do this, Mphahlele said ‘those people were disqualified because they don’t have qualification shares as required by the Companies Act, so we don’t have to use those procedures’.

“But the Companies Act says this only applies if the company’s articles of association requires directors to hold shares – and Tension Overhead’s do not. While Cipro could not explain how this incident happened, it said it was ‘ investigating’ the matter. Source: www.railwaysafrica.com

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